Submitted Under Third Circuit Rule 12(6) February 28, 1984.
Rehearing and Rehearing En Banc Denied July 9, 1984.
OPINION OF THE COURT
GARTH, Circuit Judge:
This appeal is taken by plaintiff Time Share Vacation Club ("Time Share") from the dismissal of Time Share's breach of contract action against defendants Atlantic Coast Resorts, Ltd. ("Atlantic"), Coastal Marketing Associates, Inc. ("Coastal") and Martin L. Schuman, Jr.
Time Share, a Pennsylvania corporation with principal offices in Philadelphia, alleged that it entered into a contract with defendants Atlantic and Coastal on July 24, 1982. Under this contract, Time Share was to attract potential customers to purchase vacation "interval time shares" at the development known as "Atlantic Resorts," located in Ocean Pines, Maryland. Atlantic, Coastal, and Schuman were all citizens of Maryland. The contract allegedly provided that Time Share would receive a commission on all sales made through its promotional efforts, and was to receive reimbursement for costs and labor. This agreement was apparently signed by Martin Schuman as President and controlling shareholder of both Atlantic and Coastal, and was executed in Maryland.
The complaint alleged that Atlantic and Coastal breached this agreement when they failed to reimburse Time Share for various expenses, totalling $74,000. Time Share also sought $252,000 in lost profits
In lieu of an answer, defendants filed a motion to dismiss for lack of in personam jurisdiction. Fed.R.Civ.P. 12(b)(2). The district court, without opinion, granted the motion and dismissed the action against all defendants. It is from this order that Time Share appeals.
The sole issue before us is whether Time Share has established that defendants had sufficient contact with the Commonwealth of Pennsylvania such that a court may properly exercise personal jurisdiction over them. Once a jurisdictional defense has been properly raised, "the plaintiff bears the burden of demonstrating contacts with the forum state sufficient to give the court in personam jurisdiction." Compagnie des Bauxites de Guinee v. L'Union, 723 F.2d 357 (3d Cir.1983) (Seitz, C.J.).
Rule 4(e) of the Federal Rules of Civil Procedure permits a district court to assert personal jurisdiction over a nonresident to the extent allowed under the law of the state where the district court sits. In turn, the Pennsylvania Long Arm Statute, Pa.Stat.Ann. tit. 42, § 5322(b) (Purdon 1981) allows a court to exercise jurisdiction over a person "to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." Thus, the reach of the Pennsylvania statute is coextensive with the due process clause of the United States Constitution.
Under the due process clause, a court may not exercise personal jurisdiction over a non-resident defendant unless there are certain minimum contacts between the defendant and the forum state. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Essentially, before hearing a case, a court must ask whether "the quality and nature of the defendant's activity is such that it is reasonable and fair to require [that it] conduct [its] defense in that state." Kulko v. Superior Court of California, 436 U.S. 84, 92, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316-17, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1940)).
In interpreting this constitutional standard, the Supreme Court has determined that, in order for a non-resident defendant to be subject to the jurisdiction of the court, it must have purposefully availed itself of the privilege of acting within the forum state. World-Wide Volkswagen, 444 U.S. at 295, 100 S.Ct. at 566; Hanson v. Denkla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). Pennsylvania courts have also articulated the constitutional standards of due process as they are incorporated into the Pennsylvania statute. In Proctor & Schwartz v. Cleveland Lumber Co., 228 Pa.Super. 12, 323 A.2d 11 (1974), the court developed a three step analysis to determine whether or not sufficient contacts are present for the exercise of jurisdiction. The court stated:
323 A.2d at 15.
In an attempt to satisfy the minimum contacts requirement, Time Share submitted
The affidavit which contained these averments represents the entirety of the evidence submitted by Time Share in support of the proposition that in personam jurisdiction properly lay against defendants.
In examining whether Time Share has met its burden of proof, we must make some comment at the outset regarding the state of the record. Given that Time Share places central importance on its contract with Atlantic and Coastal in establishing the contacts of those defendants with Pennsylvania, one would have assumed that Time Share would have furnished a copy of that contract on which it relies for jurisdiction in the Eastern District. We have searched the appendix in vain for such a copy. See Fed.R.App.P. 30(a) ("The appellant shall prepare and file an appendix to the briefs which shall contain ... any other parts of the record to which the parties wish to direct the particular attention of the court"). Even more surprising, however, is the fact that the contract is likewise not to be found in the district court record. Indeed, all that we know about the contents of the contract comes from excerpts
Since Time Share has the burden of proof in establishing jurisdictional facts, it also would bear the burden of producing a copy of the entire contract, or at the least, proffering an explanation for its absence. See Fed.R.Evid. 1002, 1003, 1004 (requiring original or duplicate of document unless lost or destroyed, or otherwise unavailable). This is particularly pertinent in this case, where Time Share has relied wholly upon the contract to establish minimum contacts of the defendants with Pennsylvania.
Even in the absence of the best evidence — the contract itself — we will examine the averments of Time Share's affidavit, although in doing so we do not suggest that Time Share will be relieved of its burden of producing the contract and of its consequent burden of proving sufficient contacts. Indeed, it is our conclusion that it has not met either burden.
As the Supreme Court has noted:
Hanson v. Denkla, 357 U.S. at 253, 78 S.Ct. at 1239. In this case, however, the bulk of Time Share's allegations consist merely of a recitation of unilateral activity on its part, which is insufficient to establish minimum contacts. The fact that Time Share itself prepared promotional material and solicited customers in Pennsylvania, albeit in compliance with the terms of the contract with defendants, does not in any way show that the defendants, or any one of them, has performed acts for or by which it could reasonably expect to be haled into court in Pennsylvania.
Examined in this light, the record developed by Time Share does not establish voluntary acts by any defendant which are sufficient to create in personam jurisdiction. We first note that a Pennsylvania choice of law provision, although perhaps a factor in showing whether the defendants could foresee that their acts would have effects in Pennsylvania, would not itself be enough to vest jurisdiction. McShan v. Omega Lonis Brandt Et Frere, 536 F.2d 516, 518 (2d Cir.1976); Baron & Co. v. Bank of New Jersey, 497 F.Supp. 534, 548 (E.D.Pa.1980). Cf. Proctor & Schwartz, 323 A.2d at 15 (Pennsylvania choice of law provision, coupled with other parts of contract, established that defendants could foresee economic impact in Pennsylvania). A choice of law provision, by itself, is merely a shorthand incorporation into the contract of rules which, for the most part, could have been explicitly written into the agreement by the parties without reference to any particular state or its law. Such a clause, standing alone, does not create any economic impact within the state whose laws have been so chosen.
Furthermore, Time Share's allegation that "All sales and promotional materials were to be and were in fact developed and designed at TVC's Pennsylvania office" is no more than a conclusory statement which only restates an ultimate fact which Time Share must prove. What is required, however, is actual evidence that, by entering into the contract, the particular defendant could foresee impact within
The only direct actions which Time Share alleges were taken by defendants (without identification as to which one) within Pennsylvania were the sending of an airplane to bring potential customers to Maryland, and the placement of an advertisement promoting Atlantic Resorts in The Philadelphia Inquirer.
Unlike summary judgment proceedings, in which a party need only submit affidavits which make out disputes of material fact, in establishing in personam jurisdiction, Time Share had a burden of proof to sustain, and thus mere affidavits which parrot and do no more than restate plaintiff's allegations without identification of particular defendants and without factual content do not end the inquiry. Here, we find that Time Share's affidavit simply failed to prove any defendant's contacts with the forum state. It is therefore unnecessary for us to speculate on the result had Time Share's allegations been more fully substantiated on the record.
The judgment of the district court dismissing this action for lack of in personam jurisdiction will be affirmed.
SEITZ, Chief Judge, dissenting.
I find myself unable to agree with the majority opinion, based on my understanding of Pennsylvania law. I read the majority opinion as holding that the allegations contained in the plaintiff's affidavit were insufficient, as a matter of law, to show the defendants' amenability to suit in Pennsylvania. Federal Rule of Civil Procedure 4(e) provides that the sufficiency of the affidavit is a matter of Pennsylvania law. Pennsylvania courts test the existence of minimum contacts sufficient for exercise of long-arm jurisdiction under the three-part test set out in Proctor & Schwartz v. Cleveland Lumber Co., 323 A.2d 11 (Pa.Super.1974). My reading of Pennsylvania cases leads me to conclude that the plaintiff's affidavit was sufficient under the Proctor & Schwartz test to make a prima facie showing of minimum contacts.
The first part of the Proctor & Schwartz test looks to whether the defendants "purposefully availed" themselves of the privilege of acting within Pennsylvania. This part of the test is satisfied where the parties enter into a contract which will be performed in Pennsylvania. Kingsley & Keith (Canada) Ltd. v. Mercer International Corp., 291 Pa.Super. 96, 435 A.2d 585 (Pa.Super.1981); aff'd by an equally divided court, 500 Pa. 371, 456 A.2d 1333 (Pa.1983). This is no less true where the contract calls for the plaintiff rather than the defendant to perform in Pennsylvania. Koenig v. International Brotherhood of Boilermakers, 284 Pa.Super. 558, 426 A.2d 635 (Pa.Super.1980); Proctor & Schwartz, supra. The contract here called for plaintiff to solicit Pennsylvania purchasers for defendants' time shares, and thus required performance to take place in Pennsylvania.
The second part of the test looks to whether the cause of action arises from the defendants' activities within the forum state. This part of the test is met where the defendants breach a contract which is to be performed in Pennsylvania. "The activity which satisfies the `purposefully availed' test above is the entering into [of] contractual obligations. The cause of action arises from the breach of those same obligations." Proctor & Schwartz, supra at 15. See also Kingsley & Keith, 435 A.2d at 591; Koenig, 426 A.2d at 642.
The third part of the test looks to whether the exercise of in personam jurisdiction would be fair and reasonable under the circumstances. The fairness of the exercise of long-arm jurisdiction is judged by due process standards, the test being whether "the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-298, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). I believe that the defendants should forsee the possibility of being sued in Pennsylvania when they breach a contract with a Pennsylvania firm which they intend to be performed in Pennsylvania. I therefore conclude that due process permits
The majority holds that the acts described in plaintiff's affidavit cannot be the basis for long-arm jurisdiction because they constitute mere "unilateral activity" by the plaintiff which coincidentally took place in Pennsylvania, citing Hanson v. Denkla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958). I disagree. The contacts relied on by plaintiff are not its own unilateral activities, but were instead acts constituting actual performance of the contract. Furthermore, plaintiff's performance took place in Pennsylvania by design, not by coincidence. In these respects the facts of this case are closer to those in Proctor & Schwartz, Kingsley & Keith, and Koenig than to those in Baron & Co. v. Bank of New Jersey, 497 F.Supp. 534 (E.D.Pa.1980), on which the majority relies.
The third part of the test also looks to the totality of circumstances to see whether it is fair to expect defendants to appear in a Pennsylvania court. Relevant factors include the state's interest in ensuring that contracts performed in Pennsylvania by Pennsylvanians are not breached, Kingsley & Keith, supra at 591, the provision in the contract making Pennsylvania law controlling, Proctor & Schwartz, supra at 15; Erie Press Systems Etc. v. Shultz Steel Co., 548 F.Supp. 1215, 1221 (W.D.Pa.1982); and such facts as defendants' sending a private aircraft to Philadelphia to transport potential buyers solicited by plaintiff to Maryland.
Because I believe that plaintiff's allegations, if proved, would have permitted service of process under § 5322(b), I would hold that the district court should not have granted defendant's motion to quash and dismiss based solely on the unproved and conflicting allegations in both sides' affidavits. Instead, the district court should have held an evidentiary hearing to give the parties an opportunity to prove their allegations. See 2 Moore's Federal Practice ¶ 4.41-1 at 4-469 n. 59.
I do not regard the absence of the contract as critical at this stage of the proceedings. On a motion to quash and dismiss we must accept as true the allegations of the non-moving party. Significantly, defendants have conceded the existence of the contract and have not challenged plaintiff's allegations as to its provisions. If plaintiff failed to present the contract at the evidentiary hearing, defendants would of course be free to make objections based on the best evidence rule. I do not believe, however, that the best evidence rule, or any other rule or statute, provides a basis here to quash or dismiss for failure to include the contract with the pleadings or affidavits or in the appendix on appeal.
I would reverse the order of the district court and remand for an evidentiary hearing.
Schuman's affidavit also alleged that the contract sued upon by Time Share was proposed, accepted, and executed in the State of Maryland.
Moreover, even if the issuance of a check could provide personal jurisdiction, at best such jurisdiction would extend only to the cause of action for payment on the instrument, and would not bring on its coat tails the counts for breach of contract. Standing alone, of course, the action for payment of the $3,000 check would not satisfy the amount in controversy requirement of diversity jurisdiction.
The dissent also likens the motion made here by the defendants under Fed.R.Civ.P. 12(b)(2) to a motion under Rule 12(b)(6) (failure to state a claim). In doing so, the dissent would require us to accept as true all of the allegations of the non-moving party. There is a significant procedural distinction, however, between these two kinds of motions.
A Rule 12(b)(2) motion, such as the motion made by the defendants here, is inherently a matter which requires resolution of factual issues outside the pleadings, i.e. whether in personam jurisdiction actually lies. Once the defense has been raised, then the plaintiff must sustain its burden of proof in establishing jurisdictional facts through sworn affidavits or other competent evidence. Contrary to the dissent's suggestion, therefore, at no point may a plaintiff rely on the bare pleadings alone in order to withstand a defendant's Rule 12(b)(2) motion to dismiss for lack of in personam jurisdiction. See International Ass'n of Machinists & Aerospace Workers v. Northwest Airlines, Inc., 673 F.2d 700 (3d Cir.1982). Once the motion is made, plaintiff must respond with actual proofs, not mere allegations.
We do not understand Time Share to contend that it was ever denied the opportunity to present whatever evidence it saw fit to adduce before the district court. (Indeed, in its brief, Time Share asserted that there was no dispute as to the facts). Rather, it simply chose to rely on the affidavit described in text as the sole basis for its jurisdictional contentions, and we have found those allegations to be insufficient.